Digital Hustlers

Casey Kait, Stephen Weiss

• Publisher: HarperCollins e-books
• Year: 2009
• ISBN:
  9780061743306
• Topic: Tecnologia e ingegneria
• Subtopic: Ricerca e competenze ingegneristiche e tecnologiche

The commercial and cultural explosion of the digital age may have been born in California's Silicon Valley, but it reached its high point of riotous, chaotic exuberance in New York City from 1995 to 2000—in the golden age of Silicon Alley. In that short stretch of time a generation of talented, untested twentysomethings deluged the city, launching thousands of new Internet ventures and attracting billions of dollars in investment capital. Many of these young entrepreneurs were entranced by the infinite promise of the new media; others seemed more captivated by the promise of infinite profits. The innovations they launched—from online advertising to 24-hour Webcasting—propelled both the Internet and the tech-stock boom of the late '90s. And in doing so they sent the city around them into a maelstrom of brainstorming, code-writing, fundraising, drugs, sex, and frenzied hype...

until April 2000, when the NASDAQ zeppelin finally burst and fell at their feet.

In the pages of Digital Hustlers, Alley insiders Casey Kait and Stephen Weiss have captured the excitement and excesses of this remarkable moment in time. Weaving together the voices of more than fifty of the industry's leading characters, this extraordinary oral history offers a ground-zero look at the birth of a new medium. Here are entrepreneurs like Kevin O'Connor of DoubleClick, Fernando Espuelas of StarMedia, and Craig Kanarick of Razorfish; commentators like Omar Wasow of MSNBC and Jason McCabe Calacanis of the Silicon Alley Reporter; and inimitable Alley characters like party diva Courtney Pulitzer and Josh Harris, the clown prince of Pseudo.com. Together they describe a world of sweatshop programmers and paper millionaires, of cocktail-napkin business plans and billion-dollar IPOs, of spectacular successes and flame-outs alike.

Candid and open-eyed, bristling with energy and argument, Digital Hustlers is an unforgettable group portrait of a wildly creative culture caught in the headlights of achievement.

IT WAS ALL A PSEUDO DREAM . . .

Jupiter Communications, an online financial analysis company, could be called the Alley’s first highly successful venture. Josh Harris, then twenty-seven and working out of his apartment, started Jupiter in 1986. When it went public years later, it returned hundreds of millions of dollars to its investors and founding partners.

When Josh found himself being bought out of his position in Jupiter in 1995, he jumped at the opportunity, starting a new company called Jupiter Interactive. Before long it would be relaunched as a Web broadcasting company, Pseudo.com—early enough in Internet history that words from the dictionary were still available as Internet addresses.

Investors knew they had made money with Josh before, and felt he was a good founder—he knew when to start out and let someone else take over. He may have been quirky, but who could argue with success?

Pseudo’s first victory came when it won the chance to run Prodigy’s Chat application in return for a percentage of the profits. Harris used the windfall to begin to build a radio program, then an online radio website, then a full-fledged interactive broadcasting site, with fifty hours of original programming on a wide range of offbeat subjects.

People often said Pseudo was ahead of its time, that its curse was being too early. Pseudo was one of the first interactive broadcasters, but plenty of experiments in Internet television had failed throughout the ’90s.

Pseudo’s online content was divided into a variety of separate channels with a few programs on each channel. Each channel featured a different genre, such as music, sex, gaming, politics, science, and more.

The programs were designed to appeal to niche groups. Desivibe, for example, which covered the Bhangra scene in London and the United States, was probably one of the top news outlets for South Asian music lovers. The shows on CherryBomb, including the Women’s Channel, were extremely forward-thinking and raw.

But since most of the site’s video content required that the user have a broadband connection, the potential audience for Pseudo’s content was a fraction of the general Web population. Most of the people in the Alley expected the bandwidth to become widespread much more quickly and overestimated what the climate would be like in the immediate future. Pseudo used digital video, which it edited, compressed, and then streamed over the Internet. The most crucial problem was that broadband access to the Internet—anything over 56K—was available to only a fraction of the country even until the end of 2000. Most Pseudo visitors were other dot-com employees on T1 lines or students connecting over university networks. Still, it was an audience with the potential to become “early adopters” of what had the potential to become the world’s first new media brand. Brand building is the entrepreneur’s ultimate holy grail—because an MTV or CNN will not only return money again and again, but become a part of the culture and change the culture around it.

Many people, too, complained about the “public access” nature of the shows, comparing them to the ragged production values of unregulated community television. Josh genuinely felt that if the Web was going to be a broadcast entertainment media, its hit shows would have to be invented under the new rules, and he intended to create an environment that would make the medium work.

Throughout the late 1990s, many bright people in New York thought Pseudo would pull it off. The sale of Broadcast.com, an early online audio pioneer, for 5.6 billion dollars to Yahoo in April 1999 only seemed to validate the notion. There was a sense among the workers at Pseudo that an IPO would turn every street kid Josh couldn’t say no to into a millionaire.

Every time Pseudo seemed on the verge of running out of money, Harris and his team turned up a new slate of last-minute investors, bringing in serious players like the Tribune Co., Intel, and Prospect Street Ventures, a respected New York VC fund. All together, Harris raised over thirty million dollars to fund the company and had more than two hundred people working out of three offices housed in prime real estate around Broadway and Houston Street, in the northeast corner of SoHo.

The main Pseudo building, at 600 Broadway (recognizable from afar by the enormous DKNY painting of the city on its side), became Harris’s central base of operations. He took over one of the floors as his personal loft and built colorful offices for the several channels of the network. Staffers became used to seeing their eccentric boss dressed up as Lovey, his clown alter-ego.

GENE DEROSE I think I’m one of those rare people who had a clear view of Josh right from the outset, and I don’t think I really changed it after the first week I met him. One of the most unorthodox people I’d ever met. He was also, though, the first entrepreneur and business owner I’d ever dealt with at any close level, so a totally mixed combination of very quirky person and, at least at first, a business authority figure for me.

He was very focused and intelligent when he wanted to be, but had very far-ranging sets of interest and creativity, not ever wanting to really get pinned down in any one place.

JOSH HARRIS I put an ad in the New York Press. Gene showed up, and he was almost like just a warm body. I didn’t pay him very much. This must have been 1988 or something, and we just sort of worked things out over the years. We went two or three years trying to figure out our deal. There was nothing written on paper; we just sort of figured it out. And he was hungry for it, and I knew I wanted to do Pseudo, so we made our plan, me and him, and brought in Kurt Abrahamson, Gene’s old-time friend.

And then the market started to hit. I count my lucky stars for having Gene show up, because it worked out. He was born to the business, much more than I was. Actually, by the time he showed up I was already doing it for five years in one form or another, so by the time I left Jupiter I’d been doing it for eight years or something. I had kind of done my time. I think I left on top.

When I left, he and I were starting to fight over who got quoted in the press—not really fight, but it would be a competitive thing to see who would get the quote. I knew he knew what he was doing, and it was very comforting. As the thing was starting to pop, the Wall Street Journal and the New York Times, USA Today, and the Washington Post were covering us, and where you were placed in the articles was the litmus test. And I was starting to be placed very consistently at the right spot in each of the articles. To me that was the indicator that you’re on top of your game.

So there was a point in time—I would say for two or three years—where I was the best in the field. Maybe the world at that time didn’t acknowledge it, but I was the best in the field. And it was like, All right, now what do I do? And then Gene, as it turned out, became the best in the field. I like to think that he was well-trained, and then he proved out that he was not only the best in the field but also a superior businessman.

GENE DEROSE Josh never had a straightforward sense of conventional business. There were never really any propriety or illegality issues per se, but when he left Jupiter to start Pseudo, he should never have called it Jupiter Interactive. For some odd reason I wasn’t thinking through the implications at the time; we let it just happen that way. From day one, from the day he left, they had nothing to do with each other. Their economics were separated out. Kurt Abrahamson had started at Jupiter in early ’94; the only remaining tether was that Josh owned a chunk of Jupiter. Within a year or so he changed the name to Pseudo.

The company cut a crucial deal with Prodigy to share revenues on the Adult chat application.

JOSH HARRIS Scott Kurnit basically did the deal. It was him. It wasn’t the other lame guys at Prodigy. When the checks came at the end of the month, we were doing twenty-five percent of all traffic on the Prodigy services company, which at the time was the largest online services company in the world. Right? So whatever we did with them worked, and he was the one who brought us in. They were making—add overhead and all that, but they were making ninety cents on the dollar for whatever traffic we brought in, and we were making ten cents on the dollar. They were doing pretty good, and we were doing pretty good.

What happened was that he left, Bill Day left, Catherine Hickey left—they were the key people there—and Prodigy got sold, and then Ed Bennett came in. While Ed Bennett was there he sold the company to this guy up in Boston, who came in with an ego, and was not a practical businessman. He was a good businessman, but his ego was involved; it was too big for him. In my opinion.

NICHOLAS BUTTERWORTH Josh Harris—this shows you how smart Josh is—took over a whole wing of the building at Prodigy’s White Plains headquarters and, legend has it, had his own key made so the Prodigy execs couldn’t get in to the space he had taken over. Not only had he commandeered their space and their engineers, they couldn’t even get in to see what he was working on.

Josh was brilliant at getting the concession to do adult chat on Prodigy, and whoever let him do it was clearly an idiot who didn’t understand the dynamics of online service businesses. AOL, of course, was built on adult chat; Yahoo was built on adult searching. If you took all the adult content off the Internet you wouldn’t have a whole lot left. Josh had the only area on Prodigy where you could use free language. Everywhere else the language was censored and the topics were censored. He said, it’s going to have a lot of topics, including art and fashion, and meeting people, but it was the only place you could get hard-core sex on Prodigy, and he was getting a cut of the connect-time revenues. Obviously sex chat is the biggest driver of connect time after email, so he cleaned up. So in that sense I think he was very smart.

ROBERT GALINSKY | EXECUTIVE PRODUCER, PSEUDO.COM | Prior to October of ’95, I didn’t own a computer. I was heavily into the spoken-word scene, doing a lot of theatrical spoken-word performances. I met Josh in early ’95. Honestly, I didn’t really like him right away. I thought he was exactly what he is, which is pushy and arrogant and sort of a know-it-all. At the time, I didn’t know he could back up his know-it-allness.

I was producing a show called “Galinsky’s Full Frontal Theater” on Twenty-eighth Street. It was a Thursday night show, an all-night open mike. At midnight we would start serving pasta and wine for free. Josh used to show up at midnight with a bunch of people with weird instruments made out of trash and garbage. I had heard he was an interesting dude, so I said, If you ever have a project you want to do, let me know.

First thing he pitched to me was “Let’s do a book—a coffee-table book about the Internet. We’ll get screen grabs and we’ll do interviews with people and we’ll have a cool art book about the net.” So I bought a couple of books about how to write a book and spent a couple of months trying to figure it out and then just called him up and said, “Look, this isn’t the right one. Something else is going to have to work before this one.”

He called me back about a month later and said, “We want to do a radio show about the Internet.” And I said, “I know nothing about the Internet. I don’t own a computer. I’m not into it.” He said, “It doesn’t matter. You know how to produce and keep people interested. And that’s what I need. The rest I can teach you.”

Josh seemed to trust people, consistently, naïvely, and blissfully, to live up to their potential.

ROBERT GALINSKY Prodigy chat was netting us a hundred and fifty thousand dollars a month. And I used to watch Josh late at night clicking through, and counting how many people were in the chat rooms, and doing the math: percentage of people and percentage of time equals how much money. Josh calls me one of his five soulmates. He and I spent many nights just sitting around and philosophizing, shooting the shit; this was usually like three in the morning, and we were the only ones left in the giant ten-thousand-square-foot empty loft, and I’d see him clicking and figuring out the take, and he’d say “Good—we did nine thousand dollars today,” rocking with that little autistic body rock that he has.

JOSH HARRIS Prodigy was looking for a new CEO, and when they made the offer to Ed Bennett, the headhunter asked me if I would talk to him. They trusted that I knew the racket. So Ed asked me if he should take the job, and I said definitely. It was him versus some IBM guy, and I’m worried about having him take away my contract, and they always kept me on edge for that; it was a sick company. I mean sick in the sense that it was literally not a healthy company. And so I’m always worried that they’re going to take away my contract, even while I’m doing twenty-five percent of the traffic. Their view is, If he’s doing it, why should he be making all that money? As opposed to, Can we get the guy to burn more hours. They didn’t reward success. So it was Ed versus some IBM guy, and Ed seemed like a much more interesting choice. So Ed came along.

I could see that the world was changing. Prodigy was going to a flat-rate scheme, something like that, where I’d be screwed. And also the chat platform they were using really wasn’t that smart, and the one we were using was no big deal. So we decided to go build a new platform, to build a project that was half owned by each of us. Which, of course, being in the scene and knowing Ed and Betty [Rosserman, Bennett’s girlfriend at the time], I decided that it would be good to call the project Project Betty. What the heck. I knew as long as they were together I’m in good shape.

Then these new guys came in, and for whatever reason they bought our half out—they bought our whole relationship out, and paid us a lump sum of money. And that funded us for a period of time.

ROBERT GALINSKY They started to realize that part of Josh’s genius was that he had his guys write the chat software for Prodigy, and then he licensed it to them with some conditions: you can use your software if you give us an area where we can do Pseudo chat next to Prodigy chat, with our brand on it, and we make X a percentage on numbers of people in the rooms and usage based on time. So Prodigy went for it, signed on for a year. Little did they know though that Pseudo chat was doing like eighty percent more traffic than Prodigy chat. Their own chat sucked. Because they had rooms like Connecticut and the Knitters’ Room. Josh’s rooms were Vampire Pub; the Neighborhood Bar; Domination and Submission. We were doing incredible traffic. They realized when their contract was coming up for renewal they weren’t going to do it that way. They were embarrassed, and Josh is very arrogant. They didn’t like it that Pseudo was beating them, and that Josh Harris was the guy behind it. We couldn’t have our sugar daddy in Prodigy anymore.

JOSH HARRIS There was this woman who just started hanging around and staying at my house. She was there for like three months. She sort of stayed in my room. And I think we did it once, and I didn’t really want to do it. It was like a mercy deal, to be perfectly frank.

She went crazy. I was running a fairly serious chat application on Prodigy, getting the software built, so I’ve got this great gig over there. And meanwhile I’ve got all hell breaking loose at home. From whatever party, I had a case of six half gallons of vodka. And I started noticing about one would be missing every two days.

And the last they found her, Jacques Tege, who I started Pseudo with—and also the animator that I made Launder My Head with, which I’m about to go into production on—he was downstairs at 600 Broadway, in his car, and she jumps in his car naked in the middle of winter. She’d just gotten out of a limousine filled with Japanese businessmen who I guess she was with all night. Because I’d finally kicked her out.

The night before, I’d been sitting in my room. She could see my light on, and I could hear her calling up to me, and I didn’t go to the window. I just couldn’t do it. I couldn’t do it. It’s like, I had to stop. It had to stop somewhere. And the next night she wound up in the car with the Japanese businessmen, and she wound up jumping out in subzero weather into Tege’s car, and then running down the street naked with bloody feet. And then wound up in Bellevue for two or three weeks. And now she’s fine, she has a kid and she’s fine.

What were the parties like?

ROBERT GALINSKY They were great. There was one party that—it was the stupidest party. After it was over I realized how stupid we were. We could have been on America’s Most Stupid Tragic Videos, hosted by Jack Palance, saying “What were these people thinking?”

We worked with a group called Fakeshop—Jeff Gomperts, really cool guy. And we lined the entire space—a ten-thousand-square-foot loft—with black plastic: ceiling and walls, every square inch, doors covered, tailor-made for the doors. We then opened up our fifth floor and had a two-floor party. And our tobacco sponsor was Moonlight cigarettes, and Skyy Vodka was the vodka sponsor. So we had cigarette girls walking around in push-up bras—among many other wild things, like people in crocodile costumes and people walking around with cameras on their heads. But the wild thing was that by midnight there was so much smoke in the space that literally you had to sit on the floor to breathe better.

So people were sitting down at the edges of the walls, just because three quarters of the room was filled with this haze. And they had given away something like twenty-two hundred cigarettes throughout the evening. That’s when I realized that Jack Palance would have said, “They lined a building that’s two hundred years old, that has one of the only wood foundations left among buildings its size—a landmark building, because it’s all wood—with plastic on every wall, and gave away twenty-two hundred cigarettes, and overcrowded the place.” There was something like four thousand people. It was a total death trap.

There were parties that were just purely outrageous, just for the sake of having a party. They were always strategically positioned in Josh’s mind—and many people might not have known it—to court VCs or investors, to make position plays in the press. So there was always some ulterior motive, in terms of climbing the social ladder or the fiscal ladder, that some of us underlings didn’t always understand. So some people would be angry that the PA sucked; we got the wrong PA; the video projection that I had wasn’t right. Little did they know that it didn’t matter in the big picture. The big picture was that two thousand people showed up, and Peter Gabriel got turned away at the door. It was worth the party just because Peter Gabriel got turned away at the door.

You’d have to pack your desk up, wrap it in plastic and push it against the wall, and now it was a serving table. You had to put your computer away; anything personal that you had would have to be locked down. Basically, when we had a party, if the party was Friday, by Tuesday you minimized your full-time job, just making sure the radio broadcast went out. But the next ...